|6 Months Ended|
Jun. 30, 2020
|Subsequent Events [Abstract]|
In March 2020, the outbreak of COVID-19 (coronavirus) caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, including in each of the areas in which the Company operates. While to date the Company has not been required to stop operating, management is evaluating its use of its office space, virtual meetings and the like.
The Company provides an integrated network of kiosks, terminals and payment channels that enable consumers to deposit cash, convert it into a digital form and remit the funds to any merchant in its network quickly and securely. The Company has plans to roll out 50 kiosks in Southern California to provide digital payments for the unbanked and underbanked using self-service kiosks and an E wallet ecosystem. The kiosks are currently located in the Company's warehouses in Southern California awaiting installation. Due to measures imposed by the local governments in areas affected by COVID-19, businesses have been suspended due to quarantine intended to contain this outbreak and many people have been forced to work from home in those areas. As a result, installation of the Company's network of kiosks, terminals and payment channels in Southern California has been delayed, which has had an adverse impact on the Company's business and financial condition and has hampered its ability to generate revenue and access usual sources of liquidity on reasonable terms.
The Company has been following the recommendations of local health authorities to minimize exposure risk for its employees for the past several weeks, including the temporary closures of its offices and having employees work remotely to the extent possible, which has to an extent adversely affected their efficiency. As a result, the Company's books and records were not easily accessible, resulting in delays in preparation and completion of its financial statements. Further, the various governmental mandatory closures of businesses in these locations have precluded the Company's personnel, particularly its senior accounting staff, from obtaining access to its books and records necessary to prepare the Company's financial statements to be included in the Quarterly Report.
The Company continues to monitor the impact of the COVID-19 (coronavirus) outbreak closely. The extent to which the COVID-19 (coronavirus) outbreak will continue to impact the Company's operations, ability to obtain financing or future financial results is uncertain.
Convertible debt issued
On July 1, 2020, the Company closed a transaction with Cavalry Fund I LP ("Calvary"), pursuant to which the Company received net proceeds of $246,600, after certain expenses in exchange for the issuance of a $300,000 Senior Secured Convertible Note ("Initial Note"), with an original issue discount of 12.5% or $37,500, bearing interest at 10% per annum and maturing on June 30, 2021, the note is convertible into shares of common stock at an initial conversion price of 0.035 per share, in addition, the Company issued a warrant exercisable over 8,571,428 shares of common stock at an initial exercise price of $.0.05 per share.
Calvary has agreed to purchase an additional $300,000 Senior Secured Convertible Note (the "Second Note"); from the Company upon the same terms as the Initial Note, within three trading days of a registration statement registering the shares of the Company's common stock issuable under the Notes and upon exercise of the Warrants being declared effective by the SEC. On July 28, 2020 the registration statement was declared effective and on July 31, 2020, the Company received the additional net proceeds of $262,500.
The Notes may be prepaid at any time for the first 90 days at face value plus accrued interest. From day 91 through day 180, the Notes may be prepaid in an amount equal to 115% of the principal amount plus accrued interest. From day 181 through day 365, it may be prepaid in an amount equal to 125% of the principal amount plus accrued interest. The Note contains certain covenants, such as restrictions on: (i) distributions on capital stock, (ii) stock repurchases, and (iii) sales and the transfer of assets.
In connection with the Securities Purchase Agreement, the Company entered into a Registration Rights Agreement, dated June 30, 2020 with Calvary pursuant to which it is obligated to file a registration statement with the SEC within sixty (60) days after the date of the agreement to register the resale by the Investor of the Conversion Shares and Warrant Shares, and use all commercially reasonable efforts to have the registration statement declared effective by the SEC within seventy five (75) days after the registration statement is filed.
The Company has pledged substantially all of its assets as security for amounts due under the Notes, upon the terms and subject to the conditions set forth in a Security Agreement, dated June 30, 2020, between the Company and Calvary.
On July 13, 2020, the Company issued a Convertible Promissory Note in the aggregate principal amount of $63,000 to Power Up Lending Group Ltd for net proceeds of $60,000 after certain expenses. The note has a maturity date of July 13, 2021 and a coupon of 12% per annum. The Company may prepay the note with prepayment penalties ranging from 115% to 135%. The outstanding principal amount of the note is convertible after 180 days, at the election of the holder into shares of the Company's common stock at a conversion price equal to 61% of the lowest trading price during the previous fifteen trading days.
Convertible debt settled
On July 8, 2020, the Company paid $90,446.60 to Power Up Lending Group, thereby extinguishing the convertible note issued on December 23, 2019, in the principal amount of $63,000 including interest and penalty interest thereon.
On July 10, 2020, the Company paid $25,975 to Black Ice Investors LP, thereby extinguishing the convertible note issued on November 25, 2020, in the remaining principal amount of $15,500 including interest and penalty interest thereon.
On July 15, 2020, the Company paid $61,294 to Power Up Lending Group, thereby extinguishing the convertible note issued on January 22, 2020, in the principal amount of $43,000 including interest and penalty interest thereon.
Promissory Note issued
On July 17,2020, the Company issued a promissory note to Dieter Busenhart in the aggregate principal amount of $50,000 for net proceeds of $50,000, bearing interest at 10% per annum and maturing on January 17, 2021.
Small Business Administration ("SBA") loan
On July 7, 2020, the SBA advanced a loan of $150,000 in the form of a promissory note to the Company, the note bears interest at 3.75% and is repayable monthly in installments of $731 beginning on July 7, 2021, the balance of the principal and interest is payable 30 years from the date of the note. The note is secured by all tangible and intangible property of the Company. The proceeds are to be used for working capital purposes to alleviate economic injury caused by the COVID-19 pandemic.
Between July 15, 2020 and July 22, 2020, in terms of conversion notices received from Odyssey Funding LLC, converting an aggregate principal amount of $40,000 and interest thereon of $2,668, at an average conversion price of conversion prices of $0.007 into 6,059,443 shares of common stock.
Between July 8, 2020 and July 20, 2020, in terms of conversion notices received from Power Up Lending Group, converting an aggregate principal amount of $54,000 and interest thereon of $5,580, at an average conversion price of conversion prices of $0.0087 into 6,843,319 shares of common stock.
On July 20, 2020, in terms of a conversion notice received from GS Capital Partners, converting an aggregate principal amount of $35,000 and interest thereon of $10,418 at a conversion price of $0.0083 per share into 5,466,723 shares of common stock.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef